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How improved bills of materials and routings benefit manufacturers

Sep 21, 2021

A single manufacturing facility can have multiple bills of materials (BOMs) to produce its products. These comprehensive lists of parts, components and assemblies also include detailed routings for compiling and assembling materials into a completed product. A BOM not only serves as the “shopping list” but also contains the step-by-step recipe for manufacturers.

A modern enterprise resource planning system (ERP) provides many benefits when it comes to BOMs and routings. Like any good recipe, ensuring accuracy is critical to producing a desirable outcome. Here’s how an ERP system can help manufacturers can improve their BOMS, routings, processes, workflows and finished products.

Provide real-time CTP data to customers

When a customer places an order or calls to check on an order’s status, the right capable to promise (CTP) information lets them know when to expect a finished good. Being able to provide this information requires accurate BOM and route data.

At any point in time, an ERP solution can provide real-time reports on what materials are on hand and when parts are due to arrive. This transparent data can offer a full understanding of capacity to provide CTP information to a customer.

Improve your supply chain management

Delivering the right materials to the right place at the right time is at the heart of any properly implemented BOM and routing.

Your manufacturing business’s ability to properly manage supply chains relies on accurate BOMs to request inventory from purchasing and ensure that no interruptions to the manufacturing process occur. Some of these interruptions include: 

  • Inaccurate representation of required materials, making it difficult to provide accurate pricing to customers
  • An overstatement of consumption of raw materials, resulting in inaccurate costs
  • Short inventory during production runs, delaying completion of finished goods
  • Larger than normal scrap, loss and yields, which compromise profits

When integrated with ERP software, BOM data can automatically flow to the purchasing department so it knows what to purchase and when — reducing the likelihood of running out of materials or causing late shipments.

Facilitate accurate capacity planning

Having the required materials on hand to produce a product is only part of finished good process. The routing outlines the steps and operations required to facilitate accurate capacity planning — knowing when certain resources, including plant floor machinery and tools (and the human resources required to operate them), are available. Just as importantly, routing can identify when those resources are overbooked.

As an example, Machine A may have capacity to run a particular order based on future production requirements. Accurate routing will assess capacity across the plant and may determine that Machine B also has availability and can assist in expediting the ship date, resulting in optimal use of machinery, resources and time.

An inaccurate representation of routing data may result in an overlap in machine load and a backlog increase, missed deadlines or costly overtime to compensate for lost time.

Increase flexibility to impact fulfillment costs

It’s not uncommon to have different versions of routes for the same product based on order quantity or resource capabilities.

For example, a production order for 1,000 units may be slated to run on a primary, newer machine that has faster output. An order for 10 of those same units, however, would not warrant the interruption to that high-output machine for such a small run. A second route can be developed to accommodate for such variances.

This flexibility allows a manufacturer to provide accurate costs and ensure their production floor remains efficient and that orders are completed and shipped on time, driving up service levels and customer satisfaction.

An optional route may also involve subcontractors to accommodate timely fulfillment, add value and allow your facility to focus on its core competencies. Using external resources requires clear expectations and communication to ensure that your CTP is not negatively impacted.

BOM and route information allows a manufacturer to analyze and identify problem areas to address operational issues and reduce excess waste based on acceptable standards and actual use. Such insights into variances provide opportunities for cost containment, substitutions and iterative decision making during the production process.

Improve BOM management and route accuracy with ERP technology

 

As you evolve product designs, introduce new components or acquire new plant machinery, your BOMs and routes will need to change with them. Determining these standards is not only useful for established processes and workflows but also allows engineers to design various BOM and routing scenarios to determine the best outcomes. Manufacturers need to ensure there is an accurate depiction of materials, production time, inventory, labor and overall costs to support their strategic goals.

Aligning all these data points during different product phases and iterations requires a robust ERP system that allows transparency among various departments. Taking the time to accurately reflect BOM and routes for each product is critical to ensuring product quality and profitability.

To explore how an ERP can improve your processes,reach out to Wipfli. We’re specialists in manufacturing technology, especially ERP tools, as well as helping manufacturers become more efficient and productive.

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Author(s)

Michael Wagner
Senior Consultant
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